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September 7, 2005

The 2005 Maryland Luddite Act

Kevin E. Dayhoff

Competition is stiff as to which piece of legislation dropped in the hopper during the 420th session of the Maryland General Assembly, was truly the most thoughtless and imprudent - bar none! House Bill 514/Senate Bill 401 wins the 2005 Luddite Bill of the Year Award.

From January 12 through April 11, 2005, there were 2,632 bills introduced in the Maryland General Assembly. More than 800 passed. As the 2006 session looms nearer, it is appropriate to take stock of where we are and where we need to go.

In an analysis of the 2005 session, the obscure we readily see. The obvious takes a little longer.

You remember studying about the Luddites? Luddism was a worker movement which began around 1811. The Luddites fought against the Industrial Revolution and opposed the evolution of free market economics and technological progress because they worried that it threatened their jobs. It is in the spirit of reviving Luddite protectionism, almost 200 years later, that the Maryland General Assembly passed HB514/SB401.

HB514/SB401 is entitled: "International Trade Agreement - Procurement Rules - General Assembly Approval." This bill essentially says, in part, that Maryland's state government will not honor any international trade agreement entered into by the federal government without the express permission of the Maryland General Assembly. It also retroactively invalidates any previous U.S. international trade agreement already in place, such as the Government Procurement Agreement.

A comprehensive discussion of globalization can be accomplished another time. But enacting protectionist laws which attempt to obviate global economic and market forces is tantamount to legislating the weather. History is replete with examples of protectionism - and how it never works. In the meantime, read Thomas L. Freidman's "The World is Flat."

Not only is the Maryland General Assembly now in the business of meddling with U.S. foreign policy, but according to the National Foundation for American Policy, a non-partisan public policy research organization, the law improperly intrudes "on the federal foreign affairs power and violates the U.S. Constitution's Foreign Commerce Clause. Simply put, states are not allowed to make their own trade or foreign policies.

"In sum, state laws that prohibit the performance of public contracts outside the United States may violate the Commerce Clause because they seek to regulate foreign commerce, an area of federal preeminence. Also, courts scrutinize state laws that affect foreign commerce, such as these, more strictly than laws affecting only domestic commerce..."

Relying on the National Foundation for American Policy to explain the Government Procurement Agreement: "The United States, along with more than 30 other nations, has signed the Government Procurement Agreement, which prohibits state and federal procurement policies from discriminating on the basis of where work would be performed."

The 2005 Maryland Luddite Act passed the House and Senate on March 30 and April 1 respectively. Gov. Robert L. Ehrlich wisely vetoed it on April 8. The veto was not sustained on April 11. (Senate 33-14 and House 93-43) It went into effect on July 1, and will certainly limit competition for state contract work and increase procurement costs for the Maryland taxpayer. Although the law befogs the obvious with elegant nonsense, it literally begs to be court tested, adding additional unnecessary taxpayer expense.

The National Foundation for American Policy offered the following explanation for legislation such as HB514/SB401: "The reasons for the impulse to impose restrictions on offshore outsourcing are understandable, though misguided. Economic factors [have] created anxiety about 'jobs moving offshore' - global competition, increased productivity, and new job creation distributed unevenly across sectors. In addition, as with other issues, bill sponsors may possess political motivations, such as putting members of the other party in a difficult position."

As the governor stated in his April 8 veto message: "This State.is serious about the place that Maryland has in the global economy. Hindering may. [affect Maryland's] ability to respond quickly to the demands of that global economy [and] will have a chilling effect on local businesses and on the State in general, regardless of who requests the trade agreement."

Issues like the Constitution, Government Procurement Agreement, foreign policy and foreign trade agreements are intellectual and over-legalistic drivel when it comes to putting on a "Huey Long costume" and playing populist of the year. Prepare for "the Maryland Democratic Party passed a law to save your jobs." Never mind the relentless march of market forces and economics.

Can you say "pandering?

In an even stranger plot twist, the HB514/SB401 fiscal and policy note remarks: ". When Government Procurement Agreement was expanded to cover procurement by local government entities in the early 1990s, the USTR [United States Trade Representative] solicited governors to include state procurement. In 1993, Governor [William Donald] Schaefer confirmed that the USTR could bind certain Maryland Executive Branch procurements to Government Procurement Agreement."

In other words, when a Democratic governor opted to participate in 1993 - that was okay. As the governor wrote on April 8, "House Bill 514 is also representative of a growing number of bills that this legislature has seen fit to pass over the last three years that seek to curtail the powers of the executive branch of government." Hmmm!

Issues like school construction and testing scores, transportation, the future viability of agriculture, the health of the Chesapeake Bay, access to affordable health care and other serious medical issues are begging for leadership and attention from the Maryland General Assembly.

Perhaps it's time to outsource these responsibilities to a two party presence in the General Assembly. All indications are that with prudent and thoughtful economic and education policies, tax, litigation and regulatory reform, (that will make Maryland more attractive to do business) Maryland can grow many more jobs than globalization can ever take away.

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